Welcome to Part One in a series of business tips.
The Basics
I
asked a question on Facebook a couple of weeks ago asking whether anyone would
be interested in business tips to help you set up and run a business.
I
was quite overwhelmed by the response I received. I was going to do just one simple blog post
but given the messages I received, I started writing lists of things I need to cover
and realised its going to be far better to split the topics over several blog
posts. I also realised from the
responses I received that I am going to have to start right at the beginning
with simple basics working my way through how to grow your business.
I
still feel quite new and completely inexperienced to the self employed world
and for the majority of time just muddle through armed with plenty of cups of
tea, biscuits, bars of chocolate and giant slices of cake hoping that I am doing something right!
I
am certainly no expert and I
am quite sure that most people won’t want or need my advice. However, I do believe we need to try and help
and support our small independent traders by ensuring that they are running
their business as efficiently as they can and that we all try to buy local
where and when we can.
I
am based in the UK so all
the links and forms detailed in these blog posts are aimed at UK
Hobby Vs Business
I
have read many a debate mainly via Facebook over the last few weeks on some of
the networking pages and there seems to be some confusion about when to
register a business. I’ve seen a lot of “but
it’s only a hobby” statements.
If
you make for pleasure, make gifts for friends and family then yes I do believe
this is considered a hobby and long may you enjoy it. However, I think that once you make something
with the intention of selling it in return for money (albeit a bit of pocket
money) then I do believe this is classed as a business and should be
registered. I would much rather register
and know I’m keeping the tax man happy than risk being reported and face a
hefty fine! And guess what? It is so easy to register with a simple form
and if you don’t earn much you don’t have to pay any tax or national insurance
contributions anyway so there’s no reason not to register. I think perhaps a lot of people fear registering
their little bit of pocket money income because they think it will all be taken
back off them by the tax man!
Registering Your Business with
HMRC
This
link will take you to the government website to enable you to register your
business. Towards the bottom of the page
there is a table and you need to choose what type of business you are starting which
will take you to the correct set of questions – I am guessing that the majority
of people reading this will fall into the first category of “New Sole Trader”. You basically need to follow the on screen
prompts where they will ask you your email address, personal details such as
name, address etc and your national insurance number.
AFTER
you have registered for self assessment you can then apply for an online account. I would definitely recommend this. It is far easier doing everything online than
faffing with paperwork, it is much quicker and you also get much longer to file
a tax return each year.
You
can also register for an online account at the end of the link provided above. Bear in mind that it takes 7 days to register
because HMRC need to send you out an activation code in the post. Once you have this it is all really easy with
online step by step instructions on how to set up. When you do get this activation code – keep it
safe as you will need it to log in each time.
National Insurance
Contributions
I
first started a business some 8 years ago selling greetings cards and designing
wedding stationery. I was young, only 19,
new to it all, done it all myself and didn’t have a clue. I ended up paying around 4 years worth of
national insurance contributions when I didn’t need to because I didn’t know
that there was a form you could fill in to be exempt from this if your earnings
are low.
If
you earn under £5,595.00 (current rate taken from HMRC website in Jan 2013)
from your self employed work you can fill out a form so that you are exempt
from paying. Once they have received
this they will send you a “Small Earnings Exception Certificate” which should
cover you for a period of 3 years.
This
is the link you need for this: -
Something to bear in mind
I
registered to be exempt from paying my National Insurance Contributions because
I already pay enough contributions through my part time day job. If you currently do not work and plan on
registering as self employed as your only job, even though you may feel that
your earnings are too low you may still consider to pay the national insurance
contributions voluntarily to keep your entitlement to State Pension.
If
you have children you may still be entitled to tax credits. Do ring them to have a chat. I did and I am still eligible for the child
care element of tax credits (the same as I was before registering as self
employed) because my business is not yet making a profit. They told me that once I was making a profit
it would depend on how much for it to affect my payments. Everyone’s personal circumstances are
different so please do give them a ring.
They are very helpful and it will put your mind to rest.
I
have no idea how it will affect any other benefits you may currently receive
because I have never personally been in receipt of any other benefits. If someone else reading this does have
experience of this and would like to help and share any information you have on
it then you would be most welcome to.
What Next?
Insurance
Once
you have successfully registered as self employed you may want to think about
insurance.
I
have insurance for several reasons.
- It’s
professional. I want to put myself
out there as a proper business who cares what it does and who cares about
its customers.
- For peace
of mind. I traded without insurance
for around 6 months initially (as its not a legal requirement) until doing
craft fairs became a regular thing and the venues I was attending started
asking for copies of my insurance certificate. There is nothing more embarrassing than
turning up to an event to set up, being asked for your table fee and a
copy of your insurance certificate then hanging your head in shame because
you haven’t got it and being turned away!
It was a great deal of weight lifted off my shoulders once I got
mine sorted.
- Customers
can feel more comfortable dealing with you knowing you are a registered business
that has insurance because they know that when they buy from you and
things go wrong, you and them are covered.
- I can turn
up to events and not look like the fool I once did!
How do you get
insurance?
It
is really very simple. Last year I was
in a panic about not having any insurance and needing it quick so I went with
the first company I found which gave me exactly what I wanted and I had my
insurance certificate the next day.
However, although I had a perfect service, because I was in a panic
about getting it pronto I hadn't shopped around and ended up spending far more
than I needed to.
This
year I have had more time to think about it and have found what I believe to be
one of the cheapest around for better cover than I had last year!
I
have found insurance which covers me for both public and product liability up
to £5,000,000 for just £48.00 per year.
Last year I paid over £100.00 for just £1,000,000 cover so it really
does pay to shop around.
And
guess what? I am happy to share the link
to the company I had it from so you can benefit too: -
Combined
Market Traders Insurance Association
I
spoke with them and emailed them before sending off my form and payment and
they have been very helpful. I sent my
application off last Monday and I had my certificate through the post by Friday
so a good service so far for good cover.
That
is the end of Part One. Well done if you
made it this far. I do hope it’s not
been too mind numbing, I've added a few pretty pics from my collection to soften the blow!
What’s Coming Up In Future Instalments
Part Two
How
to Keep Records
Methods
of Selling including how to set up a Facebook Business Page
Time
Keeping where you will each get your very own time management sheet to work out
how to make more hours in the day.
Part Three
Products,
Branding, Pricing
Part Four
Taking
photographs
Part Five
Craft
Fairs
What
you need, how to set up, do’s and don’ts
Part Six
Suppliers,
Networking, Advertising
Part Seven Onwards
To
be confirmed – depends on what else you lovely lot want me to cover.
